Walgreen to buy Drugstore.com for $429 million

Reporting from Chicago — Walgreen Co. is buying Drugstore.com Inc. for $429 million as the drugstore chain seeks a bigger foothold in the fast-growing business of online retail.

The acquisition of the Bellevue, Wash., online retailer will give Walgreen of Deerfield., Ill., an additional $450 million in annual revenue and access to more than 3 million online customers. The deal will also add about 60,000 products to Walgreen's online offerings, the drugstore giant said in announcing the deal Thursday. Walgreen has annual sales of more than $65 billion.

The purchase also will benefit existing Walgreen customers, who will have access to Drugstore.com sites such as Beauty.com, SkinStore.com and VisionDirect.com, the company said.

The deal comes just weeks after Walgreen announced that it was selling its pharmacy benefit management business for more than $525 million to Maryland-based Catalyst Health Solutions Inc. Walgreen said the sale would help it focus better on its primary business of serving customers' daily health and living needs.

Terms of the Drugstore.com deal call for its shareholders to receive $3.80 in cash for each share of stock, a 113% premium to Wednesday's closing price.

The companies expect the deal to close by the end of June. Walgreen, which owns nearly 7,000 drugstores across the country, said the purchase would cut into its fiscal fourth-quarter earnings by 3 cents a share. Walgreen also expects additional transaction costs to dilute earnings by 3 cents to 4 cents a share in fiscal 2012 and 1 cent to 2 cents a share in fiscal 2013.